Article 1. Name/ Office of the Organization.

Section 1. Name/ Office: The name of the cooperative corporation is Blue Heron Partners, Inc., and the principal office is located at 117 Blue Heron Farm Road, Pittsboro, 27312, in the County of Chatham, State of North Carolina.

Section 2. Other Offices: The corporation may also have offices at such other places within the State of North Carolina as the Board of Directors may from time to time determine or the activities of the corporation may require.

Section 3. Registered Office: The registered office of the corporation is located at 117 Blue Heron Farm Road, Pittsboro, 27312, in the County of Chatham, State of North Carolina.


Article 2. Purposes of Organization.
This cooperative corporation is formed for the following purposes:

1) To provide dwelling accommodations and community life on a cooperative basis to shareholders of the cooperative corporation to enable shareholders to pursue the vision as outlined in the Blue Heron Partners' community vision statement;

2) To maintain, operate and improve, and to buy, own, sell, convey, assign, mortgage or lease, any real estate and any personal property necessary or incident to the provision of such accommodations;

3) To borrow money and issue evidence of indebtedness in furtherance of any or all of the purposes of its business and to secure the same by mortgage, deed of trust, pledge or other lien;

4) To engage in any activity, and to perform and carry out contracts of any kind, necessary to, or in connection with, or incidental to, the accomplishments of the purpose of the corporation, and

5) To make patronage refunds to members, stockholders or others by these By-laws and/or occupancy agreements.


Article 3. Membership.

Section 1. Number/ price of memberships: There are fifteen Memberships in the cooperative, each of which is allocated to one residential household and each of which is represented by one share of common stock of the cooperative. The Board of Directors (hereinafter referred to as Board) shall set the price of each membership, which shall consist of the buy-in cost as determined by the Board for initial members and shall consist of the "transfer value" of the membership for persons purchasing existing memberships as defined in section 8 (a) below.

- a) Member defined: There shall be only one Membership per Board approved residential site, but if more than one person is entitled to occupy the same unit, the residents of that unit may purchase and share one Joint Membership. The term "Member" refers to a single or Joint Membership, and not to the individual residents as such. Each Member is entitled to one vote at membership meetings.
b) Joint Membership defined: A Joint Membership shall consist of each person listed on the stock certificate issued to that Member and each person so listed shall own equal value in the membership and shall have a right to participation in the cooperative's operations as outlined in Article 5, Section 6 below.

Section 2. Membership requirements: In order to become a member, a person or persons must:

- a) apply verbally and/or in writing for membership, in such form and manner as the board may set;
- b) be approved by at least a positive vote of all but one of the existing Member as outlined in the procedures set forth in Article 5 below;
- c) sign a subscription agreement to purchase the share of common stock representing a membership in the cooperative and to pay any sums required by that subscription agreement;
- d) pay the down payment in the amount and terms approved by the Board;
- e) sign the Board approved Occupancy Agreement for a specified residential unit.

The board shall act upon membership applications and decisions of the Membership shall be final, except as provided in Article 3, Section 9 By-laws. At any time, the Board may direct that no new applications be accepted or that new applications will be held, subject to consideration at a later date.

Section 3. Criteria for membership: Selection for membership by the Board may be based upon the following factors:

- a) ability to meet the financial obligation of membership;
- b) interest in cooperative participation; as specified in Article 3, Section 2 above.
- c) household size in relation to available dwelling unit size;
- d) special skills which could benefit the cooperative; and) such other lawful factors as the Board may deem relevant.

Section 4. Processing of membership applications: The Board may delegate initial screening of applications to a membership committee. The Board may accept or reject an application, request further information, or determine that an approved applicant's name should be placed on a waiting list. The Board may require the applicant to sign a reservation agreement and pay a partially refundable fee to be placed on a waiting list. Any such fee shall be credited to the membership price, in accordance with the terms of the reservation agreement.

Section 5. Membership certificate: Upon selection by the Board and fulfillment by the applicant of all the membership requirements of Section 2 above, the member is entitled to be issued a share of common stock in the cooperative corporation (a "Membership Certificate"). The corporation's records shall reflect the Member's name(s) as the registered holder of the Membership Certificate. Membership Certificates shall be consecutively numbered and in a form approved by the Board. Each Certificate shall be signed by the President or Vice President and the Secretary or an Assistant secretary selected by Board and shall be sealed with the corporate seal. Each Certificate shall state:

- (a) that the cooperative is organized under the laws of the State of North Carolina;
- (b) the name(s) of the registered holder;
- (c) that each Member household is entitled to one vote only. A Member's vote may not be split among joint owners.
- (d) that the cooperative has lien rights on the Membership certificate and the underlying rights as established by these By-laws;
- (e) that the Member's right to transfer the Membership is restricted, as specified in Article 9 of these By-laws.

Section 6. Lost certificate: The Board may issue a new Certificate to replace one that has been lost, stolen or destroyed, but only if the Member certifies by affidavit that such loss or destruction has occurred. The Board shall have the authority to require the Member to give the cooperative an indemnity bond to protect it from claims occasioned by the missing Certificate. The new certificate replaces the old one and makes the lost, stolen, or destroyed Certificate null and void.

Section 7. Corporation lien rights: The cooperative corporation shall have a lien on each membership and share of common stock in the corporation in order to secure payment of any sums due from the member.

Section 8. Transfer of membership: No share of common stock of the cooperative corporation, nor any Membership in the corporation, may be assigned, sold or otherwise transferred, except as provided in this section of the By-laws. In its discretion, the Board may assess the transferring member a fee to cover the actual cost of processing the transfer. By his/her request to join the cooperative corporation, each member acknowledges and recognizes that one goal of the cooperative is to provide affordable housing opportunities for low and moderate income persons and that the purpose of this section of the By-laws is to maintain that affordability. The sales price for a Membership sold by the cooperative corporation shall not exceed the "transfer value" (e.g. defined below) of such Membership.

- (a) Transfer value defined. The "transfer value" of a Membership and the related share of common stock of the cooperative is hereby defined to be the sum which an outgoing Member is entitled to receive upon completion of the requirements of this section of the By-laws; to be computed as follows:

-- (1) the initial buy-in cost to be set by the Board (currently $25,000) plus;

-- (2) the "replacement cost appraisal" of an existing residential unit is based on the actual cost at the time of the appraisal to reproduce the subject residential unit in the same fashion it exists at that time. This is done by figuring the reproduction costs of the home using new materials and then depreciating this figure for age, wear and tear, and general depreciation. The replacement cost is computed on a square foot basis. The procedure for arriving at the "replacement cost appraisal" shall be as follows: a) the board shall select a licensed appraiser to be paid for by the departing member; b) if departing member is not satisfied with the appraisal completed by the board approved appraiser, then the departing member may select their own licensed appraiser to appraise the residence; those two appraiser than shall meet and either agree upon a joint replacement cost appraisal, or if they cannot agree on said appraisal, shall jointly select a third appraisal who appraisal shall be final and approved appraisal of the residence, with the departing member and the board splitting the cost of this appraisal; plus

-- (3) an allowance, as determined by the Board, for any permanent improvements installed at the expenses of the departing Member within seventy-five (75) feet of the residential unit, which were either installed since the most recent replacement appraisal and which were not included as part of the residential unit for appraisal purposes (e.g. site improvements adjacent to residential unit); minus
 
-- (4) the cost or estimated cost to remove from the premises items that the corporation does not own and that remain in and adjacent to such residential unit or that such member caused to be moved to common areas; minus

-- (5) legal and other expenses incurred by the corporation in connection with any expulsion of such member and the subsequent resale of the related Membership.

- (b) Transfer upon voluntary withdrawal.

-- (1) A Member desiring to withdraw from the cooperative corporation shall give the Board written notice of such intention at least ninety (90) days prior to the date of such withdrawal. This notice shall specify the date on which the unit is to be vacated.

-- (2) During such ninety (90)-day notification period, the corporation shall have the option to purchase such Member's Membership together with all of the Member's rights with respect to his/her unit, at a price equal to the transfer value of such Membership. A decision whether or not to exercise such option shall be made by a majority vote of the Members of the Board (i.e. excluding the Member desiring to withdraw).

-- (3) If the corporation fails to purchase the stock certificate of a withdrawing Member within this ninety (90)-day period, or earlier notifies the withdrawing member in writing that it will not purchase such membership, then the Membership may be sold by the voluntary withdrawing Member to any person who is duly approved by the Board, under the provision specified in Article 3 and subsection (b)(2) of this section of the By-laws. Any would-be purchaser not approved by the Board may, within six (6) months of their initial denial, re-submit their application for a second vote by the Board, which will utilize the same review and approval provisions and procedures outlined above.
-- (4) The Member's rights in the cooperative corporation shall end immediately upon the purchase of his/her Membership, in accordance with this article, and the Member shall vacate his/her residential unit in accordance with the provisions of the Occupancy Agreement.

- (c) Transfer upon death of a member

-- (1) Upon the death of a Member, the value of the Membership is automatically passed to the inheritor, but the inheritor must go through the regular approval process before establishing permanent residency. During period of time between the inheritance of a Membership and the action upon the inheritor's application for Membership, the inheritor may occupy the residential unit as a tenant for a period of six (6) months or until final action is taken on the Membership application, whichever comes first. Within ninety (90) days of the death of a Member the inheritor must assume in writing the subscription agreement and occupancy agreement and pay all sums due thereunder before being entitled to Membership in the cooperative.

-- (2) If a Member's death terminates his/her Membership in the corporation because inheritor failed to comply with foregoing requirements, declined to apply for membership, declined to resubmit his/her application to the Board within sixty (60) days of the initial denial of his/her application by the Board, or his/her Membership application was denied for a second time by the Board, then after ninety (90) days the corporation shall have the option to purchase the Membership from the deceased's estate in the manner provided above in this subsections a and b)(2) of this section of the By-laws. If the corporation does not exercise such option, then the Membership may be sold by the inheritor under the provisions provided in subsections a) and b)(3) of this section of the By-laws.

-- (3) The surviving holder(s) of a Joint Membership shall be deemed to continue as holder(s) of the Membership upon the death of one who held it jointly, subject to any contracts approved by the Board that affect the ownership and participation rights of the Joint Membership or as otherwise affected by North Carolina General Statutes and law.

- (d) Transfer upon expulsion of Member for cause; eviction

-- (1) A member may be expelled from the cooperative and evicted from his/her unit by the two thirds (2/3) majority vote of the Members attending a general meeting called specifically for that purpose, as outlined below, but only for one or more of the following reasons:
A. Non-payment of carrying charges.
B. Any other violation of the occupancy agreement.
C. Violation of any provision of the cooperative by-laws, subscription agreement or any contractual agreements between the Member and the corporation.
D. Violation of any house rule or regulation of the cooperative.
(2) Before expulsion procedures may be instituted, the Member is entitled to receive a thirty (30)-day notice to cure the violation(s) or vacate voluntarily, except that no such notice is required for non-payment of carrying charges;

- (e) Procedures for exclusion for a Member: The procedure for expelling a member shall be as follows:

-- (1) Only the Board is authorized to initiate expulsion.

-- (2) The Board may vote to send a Notice to Cure to a Member for any of the above-listed violations that would justify expulsion. If a Member fails to cure the violations within the time required by the Notice to Cure, the Board may vote to begin formal expulsion procedures.

-- (3) Expulsion is formally initiated when the Board adopts a resolution of exclusion to submit to all the Members of Corporation and sends that resolution to the accused Member. The accused Member shall be given a ten (10)-day notice of opportunity to be heard at a Board or general meeting of the Membership.

-- (4) At the designated meeting, the charged Member shall first have an opportunity to be heard, after which the Members may discuss whether or not to expel. No sooner than one week following this initial meeting to consider the expulsion resolution a second meeting shall take place at which time the consensus process will be instituted. If the Board, excluding the accused Member, fails to reach a consensus on whether to expel the accused Member, then a Member may on expelled by a two thirds (2/3) majority vote of Board.

-- (5) The outcome of the vote by the Members shall be given to the charged Member in writing.

-- (6) If the Membership votes to expel a Member, the expelled Member's rights in the corporation and right to own the share of common stock representing such rights immediately end. The Member shall deliver promptly to the cooperative the Membership certificate, endorsed in such as the board may require, and the Member shall vacate her/his unit immediately.

-- (7) The corporation shall have the right to purchase the Membership at its transfer value, or may proceed with reasonable diligence to effect a sale.

-- (8) If the expelled Member for any reason should fail for a period of ten (10) days after demand to deliver to the Board the properly endorsed membership certificate, the Board may cancel the certificate and thereafter reissue a replacement certificate pursuant to the procedures outlined in these Bylaws.

-- (9) In addition to the corporation's right to expel a Member and effect a transfer of the Membership, the corporation has all the rights of a landlord. When a Member breaches the occupancy agreement, the cooperative has a right to seek possession of the member's unit by court process, in accordance with the occupancy agreement and applicable state law. Upon entry or judgment in favor of the corporation, the Member shall immediately vacate his/her unit to be evicted, and shall deliver his/her membership certificate to the Board, endorsed in such manner as the Board may require. Upon entry of judgment, the cooperative has all the rights specified in paragraphs 7 and 8 of this section cited above.

Article 4. Occupancy.

Section 1. Occupancy of dwelling units: Each Member has the right to occupy a dwelling unit on the premises. The terms of occupancy are set forth in an Occupancy Agreement between the Corporation and the Member. (No non-member may occupy a unit unless approved as a sublessee as set forth in Section 5 of this Article.)

Section 2. Form of Agreement: The board shall adopt the form of Occupancy Agreement to be entered into with Members. Once adopted by the Board, the Occupancy Agreement may not be charged without a two thirds (2/3) majority of the cooperative's Membership.

Section 3. Carrying Charges: Prior to the beginning of each fiscal year, the board shall estimate the cost of the cooperative of operating, managing and maintaining the property and related services. Each Member shall pay a proportionate share to meet those expenses, on a once-yearly basis, as determined by the Board. Other payment arrangements can be made if necessary with board approval. This fee shall cover costs of roads, wells, septic, fields, ponds, community house upkeep, newsletter, etc. If the board finds there is a need for additional funds, it may increase the required yearly charges upon giving at least 30 days notice to each member.

Section 4. Vacant Units: Whenever a unit is vacated, the Board, at its sole discretion, may entertain applications from Members wishing to move into the vacant unit. In the event that more than one Member wishes to move into a particular unit, the decision of which member will be allowed to move shall be governed by the seniority of membership of Blue Heron Farm, Inc., as determined by the date each applicant first invested in the cooperative. It is understood and agreed that in order to make such a move the Member applicant will execute a subscription agreement and occupancy agreement for the vacant dwelling unit and will pay the transfer value. Such Member shall not receive the transfer value due from his or her former unit until the purchase price for such unit has been paid by an incoming member.

Section 5. Community House Rules and Policies: The Board may establish community policies and rules as necessary for the functioning of the community, which will apply to residents and guests, e.g. property speed limit. House rules may be changed by a two thirds (2/3) majority vote of the Membership. Any house rule passed under this section may not be enforced against a resident who has not had notice of the rule. The Board may assess fines or non-monetary penalties, including termination of membership and eviction (following procedures for expulsion outlined in these By-laws, against any resident for consistent or troublesome violation of the community policies and rules. Any fines assessed but not paid become a lien on the membership certificate of the violating member.

Section 6. Subletting: With Board approval a member may sublet their dwelling unit. Upon notice from a member wanting to sublet, the Board will initiate within ten (10) days of meeting a perspective tenant an approval process to determine the acceptability of a perspective tenant. If approved, the initial lease will be limited to six (6) months. The board may extend the lease at its discretion. Approval of perspective tenants will be based upon similar criteria as for regular members. The intention is that community be created with renters in the same manner as with owners. Tenants will have similar rights a responsibilities as members and will have a voice at Board and Membership meetings, but will not have voting rights.

Article 5. Meetings of the Membership.

Section 1. Annual Meeting: After the initial membership meeting of the cooperative, the membership shall hold an annual meeting during the month of January. At that annual meeting, the Members shall elect a Board of directors in accordance with these by-laws. The members may consider any other business at an annual meeting.

Section 2. General Meetings: The Board will hold regularly scheduled general membership meetings at least monthly, in addition to the annual meeting and other meetings as needed, in accordance with these by-laws. The Board shall have the authority to cancel a general meetings with notification to the members, as well as authority to re-schedule the regularly scheduled general membership meeting as long as a notice of the proposed re-scheduled meeting is given (e.g. posted on the community bulletin board, sent to the Members in written form, post on members E-Mail, or any other form of reliable communication available to be received by all the members) at least seven (7) days prior to the re-scheduled meeting.

Section 3. Section 3. Place of Meetings: General meetings shall be held on the premises on Blue Heron Farm, unless another location convenient to the members is approved by the Board.

Section 4. Section 4. Notice: Notice. A community bulletin board shall be established to post notice of changes of meetings and other information of relevance to the cooperative.

Section 5. Section 5. Quorum: Quorum. Members present at a scheduled or properly announced meeting shall constitute a quorum.

Section 6. Voting: The following decision making process will be used: Legal, financial and property development decisions will be made with each Member (e.g. Membership) having equal decision-making responsibility and power. A decision will be considered made when three-fourths (3/4) the Members attending agree and all other Members attending the meeting agree in writing they can live with the decision, e.g "full consensus." In case one or more members attending the meeting block consensus, the matter will be tabled until the next regularly scheduled meeting or two weeks, whichever is longer, for further reflection and consideration. A Member not attending a meeting at which a decision made with full consensus may block implementation of that decision if that member notifies the Secretary within one week of the meeting. That decision would then be considered tabled until the next general membership meeting and be reconsidered just a though consensus had initially been blocked. However, a Member not attending a general membership meeting may not block such a consensus decision where implementation has already begun before that member notified the Secretary of a desire to block implementation. The Secretary shall make a reasonable effort to have distributed to each Member a copy of the minutes of any previous meetings at least one week prior to holding a general membership meeting. At the second meeting at which an legal, financial, or property development issue is considered, a decision will be made when three-fourths (3/4) of the Members agree and all but one of the other Members attending the meeting agree they can live with the decision, e.g."soft consensus." In case any two members continue to block consensus, the matter will be tabled for at least another two weeks. At the third meeting at which this issue is considered, if no consensus is reached, the decision may be made by two thirds (2/3) majority vote with Members (e.g.each residential unit entitled to one vote) attending the meeting. Each Member shall have one vote. A Member who is unable to attend a membership meeting may be considered present for the purpose of voting, if they submit in a signed written statement to the Secretary prior to the meeting stating that they will attend the meeting and what person (e.g. must be currently listed as the owner of a Membership or as one of the owners of a Join Membership) shall have authority to vote their proxy or specifying stating the exact issue(s) on which they are voting and their vote(s).

Article 6. Board of Directors.

Section 1. Number of Directors/ voting/ operations: The Board of directors shall consist of all of the Members of the cooperative corporation and shall meet and make decisions following the same procedures outlined in Article 5 above.

Section 2. Compensation: A director shall not accept compensation for serving as director.

Article 7. Officers.

Section 1. Officers Designated: The officers of the cooperative are: President, Vice-President, Secretary, and Treasurer. The President and Vice-President must be directors. One individual may serve in more than one office except that of the President.

Section 2. Election of Officers: The membership shall elect the officers of the cooperative each year at the annual meeting of the membership, before the election of directors. The board may establish and fill additional offices, if desired.

Section 3. Removal: The Members may remove an officer by a vote of two thirds (2/3) of the Members present at a general membership or board meeting, at long as the members have been notified of this vote at least ten (10) day prior to the meeting at which the vote is taken. The members may fill a vacancy so created by an election at the same meeting. The members may not vote for removal of an officer until that officer has had an opportunity to be heard before the general membership.

Section 4. Resignation and Replacement: An officer may resign upon written notice. The board shall fill any such vacancy by appointment until the next general membership meeting at which time the Membership shall fill the vacancy by election.

Section 5. President: The president is the chief executive officer of the cooperative and shall preside or assign that responsibility to another member at membership and board meetings, and shall have such other duties as are customary to the office of president of a corporation.

Section 6. Vice President: The vice president shall serve in the absence or disability of the president and shall perform such other duties as the board may from time to time direct.

Section 7. Secretary: The secretary is responsible for recording of minutes of each general meeting and board meeting. The secretary is responsible for the corporate seal, membership books, and other cooperative records as the board directs. Recording minutes at general meetings will be rotated.

Section 8. Treasurer: The treasurer is responsible for corporate funds and accounting for those funds.

Article 8. Fiscal Affairs.

Section 1. Fiscal Year: The fiscal year of the cooperative begins on the first day of January each year.

Section 2. Inspection of Books: The treasurer shall make available the corporate books and accounting records to any member or members agent upon reasonable request.

Section 3. Annual Audit: At the close of the fiscal year, the board shall retain an accountant to perform an audit for the corporate books and financial accounts. On the basis of this audit, the treasurer shall provide each member with an annual financial statement. A written report of the audit, including a statement of the amount of business transacted with business and the amount transacted with non-members, the balance sheet, and the income and expenses, shall be submitted to the annual meeting.

Section 4. Signing Corporate Documents: With prior authorization from the board the president may sign contracts, instruments of debt, and other legally binding documents on behalf of the cooperative.

Section 5. Signing Corporate Checks: All checks must be signed by a person or persons designated by the Board. Any expense over $50 must be approved at a general meeting.

Section 6. Annual Report. The cooperative shall make or cause to be made, within 60 days of the close of its operations for each year, a report of its condition. A copy of the report shall be kept on file at the principal office of the cooperative.

Article 9. Amendments.

Section 1. Articles of Incorporation:

- (a) Amendments to the Articles of Incorporation may be proposed by a two thirds (2/3) vote of the board.

- (b) Notice of the meeting to consider such amendment shall be sent by the secretary at least thirty (30) days in advance thereof to each Member at his/her last known address. The notice shall be accompanied by the full text of the proposal and by that part of the articles to be amended, as well as a statement of the purpose for such amendment.

- (c) Two thirds of the members present at the meeting called for such purpose may adopt said amendment, except the provisions of Article 5, Section 6 pertaining to excused absentee members voting shall apply.

- (d) An adopted amendment shall be filed and recorded in accordance with North Carolina law within thirty (30) days of its adoption.
Section 2. By-laws: These By-laws may be amended by the same procedures contained above for amending the Articles of Confederation.